United Kingdom

SSE to cut spending after offshore projects fail to qualify for subsidies

UK: Utility SSE is to scale back its capital investment following the failure of its two planned offshore projects to pass the UK government's preliminary affordability test.

The Galloper site is situtated off England's east coast

The company said that it will complete a "wide-ranging review" of its offshore wind development portfolio by the end of this financial year as a result of the failure to clear the first hurdle towards securing subsidies.

Both the 340MW Galloper and 1GW Beatrice projects were left out of the government's "provisionally affordable" list of projects.

As a result, SSE said it expects its overall capital spend in the five years from 2015 to be lower than the £1.5 billion (EUR 1.8 billion) to £1.7 billion a year from 2010.

The Department of Energy and Climate Change's (Decc) "final investment decision enabling for renewables" (Fider) process is designed to enable developers to take final investment decisions ahead of the contract for difference (CfD) subsidies regime that is being introduced as part of the country's electricity market reform.

Twenty-six renewable energy projects applied to Phase 2 of the Fider process, where they were assessed for their technical and financial viability.

In December Decc announced 16 projects, including seven offshore project, have reached the next stage of Fider, which could be supported by the CfD regime. Neither of SSE's projects qualified.

SSE said at the time that it was planning to work with Decc to try to find a solution to the issue.

The UK utility currently operates the 504MW Greater Gabbard offshore wind farm off England's east coast.

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